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Web 3.0 has no universally accepted definition, but is simply a term for the latest evolution in the web-based world. Incorporating everything from machine learning and artificial intelligence to augmented reality and blockchain, Web 3.0 offers exciting opportunities for consumers and investors alike. As with any evolving technology, there is no guarantee which companies and industries will be the big winners from the deployment of Web 3.0. However, these are the broad categories of investment opportunities that await those looking to own a piece of Web 3.0.
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Non-fungible tokens, or NFTs, are one of the earliest building blocks of Web 3.0. These “non-fungible tokens” are digital representations of one-of-a-kind items, which can give them value. NFTs are particularly prominent in the art space, with works by notable artists fetching high prices. In March 2021, artist Beeple sold a digital artwork called “Everydays – The First 5000 Days” for a whopping $69.3 million. Another NFT project attracted $91.8 million at the end of 2021. Overall, the NFT market is exploding from $8.07 million in January 2021 to $4.8 billion a year later.
One of the reasons NFTs are exploding is that they will have great use in Web 3.0. NFTs, as unique, non-repeatable items, can be used as proof of ownership in the metaverse, where they can also be bought, sold, and traded. In a sense, they can be used as a type of currency in the metaverse. Some of the most popular NFTs right now are avatars that can be used in the metaverse, and that demand is only going to grow.
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The metaverse is a global description of the worlds that Web 3.0 will create. Through a combination of augmented reality, artificial intelligence, social media, virtual reality, and other technologies, the metaverse will create a sort of alternate universe that, in some ways, will mirror our own. While something close to this already exists in the world of interactive, high-tech online games, the metaverse will expand on this base to create whole new worlds. Big-name companies are already lining up to be players in the space, and even social media pioneer Facebook recently changed its official business name to “Meta Platforms” to reflect the change.
Companies like Meta represent the easiest way to participate in the space, although Meta is such a diverse company that an investment there won’t be pure play on the Metaverse. A more direct way is to buy “land” in the metaverse itself. Via platforms like “The Sandbox”, investors can pick up parcels in this digital universe, and prices have risen. In October 2021, an average real estate parcel cost $2,620, but that jumped to $11,042 after Facebook announced its name change, according to CNBC. But this is only the “average” price. Just like in the real world, land in the metaverse adheres to the old real estate axiom of “location, location, location”. For example, in December 2021, a fan paid $450,000 to buy land near Snoop Dogg’s plot in the Metaverse. Of course, the land in the metaverse is purely speculative at this point, and only time will tell if values continue to rise or eventually become worthless.
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Cryptocurrency is the “financial arm” of Web 3.0. Crypto is already being used to buy NFTs, land, and other items in the metaverse, and developers see it as the financial engine of the future. Fintechs envision a future shadow banking system in the metaverse, where you can use cryptocurrency to buy or fund anything you do in the physical world. In other words, you may end up using cryptocurrency to buy a car or a house in the metaverse, or to buy an avatar.
Cryptocurrency can also be used as a simple investment platform, as is currently the case, although many market participants refer to it as speculation rather than investment. But if you believe in the worlds that Web 3.0 could potentially create, it’s entirely possible that cryptocurrency will become more about utility than speculation. With literally thousands of cryptos currently available, one market theory is that a few top coins will eventually prove their usefulness and stability and rise to the top, being the last survivors of the crypto world. If you can anticipate which cryptocurrencies it will be, they could prove to be fertile ground for investment.
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While many investors, developers and futurists are excited about the evolution of Web 3.0, there is no roadmap as to what it will eventually become. The same was true in the early days of the Internet, when it was simply a means of communicating and transferring information, with black screens and text only. Although Web 3.0 may not become the essential part of everyday life that the Internet is, it has the potential to open up a whole new world of investment opportunities. If you’re looking to get in on the ground floor, NFTs, cryptocurrency and direct metaverse investments are a good start – just understand the speculative nature of these types of investments and discuss them with your financial advisor .
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